Ethiopia has awarded its first telecommunications license to a consortium for $ 850 million, including Britain’s Vodafone, which could signal the start of Ethiopia’s closed economy.
The consortium, led by Kenya-based Safaricom with Vodafone և Vodacom, includes the British CDC Development Agency om Japan’s Sumitomo. The $ 600 million bid from South Africa’s MTN for the second patent was rejected because it is too low, and the license will compete again.
The opening of the world’s largest telecommunications monopoly in a rapidly developing country of 114 million people was presented by the Ethiopian government as “Deal of the Century”,
But potential bidders were delayed due to restrictions on offering lucrative mobile services, with the government insisting that new operators build their own infrastructure or lease it from Etiio Telecom, a state-owned monopoly, rather than using third-party tower operators.
Some applicants were also thought to be wary Unstable political situation In November last year, the federal army moved to overthrow the government in the Tigris region.
Initially interested companies, including France’s Orange and the United Arab Emirates’ Etisalat, are expected to take a second look after the license application is revised, according to telecommunications analysts.
Since the initial application was closed, the government has eased its opposition to mobile money, saying that new operators will be able to offer such services within a year, subject to the approval of the Central Bank.
Prime Minister Abi Ahmed tweeted on Saturday that the Safaricom-led consortium represented the largest foreign direct investment in the country’s history. Over the past 20 years, Ethiopia has grown in near double-digit numbers, based on an Asian-inspired development model that prevents foreign capital from controlling the “command heights” of the economy, such as banking and telecommunications.
Abiy said the new consortium will invest more than $ 8 billion over the next decade to build the network.
Brook Tyen, senior adviser to the Treasury Department, says part of the privatization team says the successful consortium is committed to launching a low-orbit satellite that will cover the entire country by 2023. The new investment will create 1.1-1.5 m of jobs, he said.
A person familiar with the bidding process said that “investment” and “employment figures” are ingenious, which is due to the desire to present good news ahead of next month’s national elections. “There is no way you can make money on earth if you invest $ 8 billion,” he said. “I think they’re just blowing up the numbers.”
Safaricom employs about 5,500 people in Kenya, a country with an economy similar to the Ethiopian economy, with about $ 95 billion and a population of 52 million, almost half the size.
However, Safaricom’s Sustainability Report states that its services support the employment of more than 1 million people through its “wider economic impact”, a measure that takes into account entrepreneurs who are able to support themselves through the telecommunications ecosystem.
Brooke said the second patent would be announced “very soon”, possibly with further clarification of the rules to make it more attractive. Prospective first-time bidders complained about the change in rules, including the lack of clarity on interconnection fees, which were reduced shortly before bids expired.
Brooke denied that the competition was transparent, saying “this is the most transparent process ever in Ethiopia.” He said the field would open later, “so we think it will be a very successful second bid.”
Ethiopia plans to sell a 40 percent stake in Ethio Telecom, which has 46 million subscribers, later this year.